Saturday, November 22, 2008

Perhaps the U.S. should reconsider capitalism

It still works; consider China.While some of this property development was fueled by starry-eyed speculators, a lot of this boom was financed through cold hard cash. Modern day Chinese are some of the thriftiest people on the planet, saving roughly 56% of their wages – which makes the seemingly stingy Japanese appear as spendthrifts. Guess what level America is still at? For instance, due to a number of variables including a relatively uncertain political climate, many members of the nascent middle class will park their savings in entire floors. And I don't mean burying the money inside the walls. They will purchase an entire floor of office space rationalizing that in the long run, it could be safer store of value than many monetary instruments (e.g. stocks), or banks themselves. And unlike their Spanish and Dubai counterparts which have created partially built ghost towns (video), not only were most of these buildings funded without taking out foreign loans or utilizing debt-based financial vehicles, but until recently, tenants were required to put a down payment of 30% on a unit. It has now been knocked down to a miserly 20%. Yes, that's right. The West is not only reeling in overcapacity brought on by numerous perverse factors (e.g., artificially low-interest rates), but millions of apartment and housing units are either going into foreclosure or already on the chop block due to lax lending standards that involved zero money down. Yet in China, even with deflating property values that have dipped more than 40% from their peak, the construction boom continues marching on due to stronger fundamentals such as solvent customers that have real jobs.

2 comments:

The financial institutions here have a really good gig. First, they and Madison Avenue convince us that we can consume our way to happiness. Then Wall Street and the banks lend us more $ than we can possibly pay back. Then they tighten up the bankruptcy laws such that we can't get rid of the debt we can't pay. Then they get the government to bail them out when their little ponzi scheme is shown as a complete farce.

The United States has turned the entire concept of the "free market" on its ear. And it has largely operated to favor big corporations at the expense of consumers. When are we finally going to get it?

Rules of the road:1. No personal attacks or insults.2. No accustory statements about wrongdoing or criminal acts against anyone.3. Say all you want about the pros and cons concerning the candidates and the issues, or the general subject of the blog post, just follow Rule #1 and Rule #2.

Wow Jim, thanks for the post and your site, very informative. Your interest and commitment to LA politics is amazing and inspiring; can you clone yourself 49 times and spread it around?

...good lord - you are as bad as the times...

smells like donkey in here

I enjoy reading your posts.

why don't you add this to your comments - your blog sucks

I do not know how I stumbled upon your pitiful blog, but apparently you do not know anything about

Great Blog!

Thanks, Jim, for providing a good forum for discussing the candidates.

Love your blog. It makes my day!!!

It's people like you, Jim, that ruin our system.

The only shortcomings of this blog is that more people may not be reading it.

I just looked at the posts. comical. Ada's drunk, corrupt cops caught on tape, some crazy lady making "art" about it (I looked at her "art" and I now know why they have starving artists shows), a Benton hillbilly running a blog about it.Come on Hollywood, this is a great B movie.

I hope you realize that very few people actually read your little blog - but keep on writing if it makes you feel important.